WASHINGTON, DC – Today, Chairman Jim Talent (R-Mo.) and the House Committee on Small Business held a hearing on improving access to health care for the uninsured. Specifically, the hearing criticized a study by the Congressional Budget Office (CBO) which claimed to assess the impact of Association Health Plans (AHPs) on the number of uninsured. The hearing revealed that the report is based on such flawed methodology that its conclusion that AHPs will not have a "significant" affect on the number of uninsured can not be trusted.

Talent, a conferee on the Managed Care Reform Bill (H.R. 2990) and author of the AHP section of the compromise bill, has been instrumental in attempts to expand access to health care for the uninsured. Talent and other Members of the Committee were concerned with the CBO report and convened the hearing to question its methodology and conclusions.

"Small businesses want to provide the same high quality health care that large businesses can, yet can not take advantage of the economies of scale that big businesses," said Talent. "That is why the CBO’s report is an insult to the intelligence of small business. Every day small businesses struggle to provide employees with quality, affordable health care, but can’t because of rising costs. Their best solution is the ability to pool together through associations to take advantage of economies of scale. At today’s hearing, we hope to set the record straight and hear from small businesses, themselves, that the CBO is wrong and that AHPs will offering millions of Americans the opportunity to access quality, affordable healthcare."

During the hearing, Talent began by questioning the CBO's use of a single study of a variety of pooled purchasing arrangements, none of which operate the way an AHP would under Talent’s health care bill which is currently in conference. The CBO used this study to incorrectly conclude that savings from administrative efficiencies and group purchasing would be negligible and therefore would not result in a significant decrease of the uninsured.

Questioning James R. Baumgardner, Acting Deputy Assistant Director for Health Policy for the CBO, Talent stated, "Are you saying that the sole support for your findings is based on a study that reviews AHP programs that do not even necessarily do what our AHP plan would do?" Mr. Baumgardner agreed that the report actually compared apples to oranges.

The CBO went on to assert that because AHPs would preempt state mandates, small business will offer stripped down health care coverage. What the report doesn’t say is that large, corporate self-funded plans already preempt state mandates under ERISA. Yet, most big corporations do not offer stripped down coverage. Why not? Because they are able to achieve economies of scale that enable them to offer more comprehensive plans.

"Good quality health care is an important tool to attract and retain high quality employees in this tight labor market," said Talent. "It makes sense that any business would want to offer the best health care possible. So why wouldn’t small businesses want to offer the same kind of coverage? Nobody questions that big businesses will offer comprehensive plans, but for some reason they seem to distrust small businesses – and that’s just wrong. Empower entrepreneurs with the economy of scale they would enjoy under AHPs, and they will provide quality, affordable healthcare."

The concerns about the CBO's methodology and assumptions lead small business witnesses and Committee Members to take issue with the study’s final numbers. The CBO asserted that only 330,000 more people would be covered through implementation of AHPs and on average, would pay about 13% lower premiums than those in traditional plans. However, another study performed by CONSAD noted that in their study regarding the uninsured, the creation of AHPs would result in 4.5 million newly insured individuals at more affordable rates.

Critics of the CBO report included Dr. Paul Wilson, Executive Director of the North American Equipment Dealers Association (NAEDA) Group Insurance Trust of St. Louis. "While the CBO report demonstrates that the AHP legislation will strengthen and expand access to affordable health care, their report is fundamentally and statistically flawed, and therefore dramatically underestimates the value of AHPs. The CBO did not account for wage differentials, health care package composition differentials, among other things, between large and small firms. Basically, the CBO is comparing apples, orange and bananas."

Adding to the criticism surrounding the CBO report, Arlene Kaplan, CEO and Founder of Heart To Home, Inc., testifying on behalf on the National Association of Women Business Owners (NAWBO), noted that without AHPs, small businesses would not have the ability to compete with larger with larger plans, such as those offered by union’s, "Unions existed for the sole benefit of representing those in collective bargaining and the establishment. We (NAWBO) believe we have needs that could be best addressed if we were permitted, as unions are, to design plans that meet those needs."

In closing, Talent added, "Small business people want and need access to offer high quality, affordable health plans. After all, 60% of the 44 million uninsured in the U.S. are small business owners, their employees and their families. I am confident that AHPs will promote health care accessibility for a segment of our population that is severely underserved – the small business community. We must make every effort to ensure that there is a decrease in the number of the uninsured and – regardless of political rhetoric. The future health of our nation depends on our actions today."